Lincoln National Life Insurance v. State Board of Equalization

Plaintiff Lincoln National Life Insurance Company (LNL) filed suit against defendant State Board of Equalization of the State of California (Board) seeking a refund of gross premium taxes assessed and collected pursuant to article XIII, section 28, subdivision (c) of the California Constitution. Southern California Gas Company (SCG) was an intervener in the suit. The trial court found LNL only provided administrative services and ordered the Board to refund all premium taxes paid by LNL for the years 1980 through 1985 plus interest. The court also awarded costs to SCG as intervener. The Board appeals from the judgment. For the reasons explained below, we have determined the trial court correctly held LNL was entitled to a full refund of the contested taxes paid plus interest and costs. The trial court erred, however, in ordering an award of costs in favor of intervener SCG.

Facts and Proceedings Below

This case arises out of an annual franchise tax, measured by the amount of gross premiums the insurer receives in a particular year, which is levied on insurers doing business in the state for the privilege of conducting an insurance business in the State of…